RP not running transparent process: KK Maheshwari, MD, UltraTech

Fraud allegation report was not given to the bidders in the data room, and this has certainly come as a big surprise to us, he said.

UltraTech Cement, an Aditya Birla Group company, has put its might behind its Rs 72.66-billion bid for Binani Cement, Rs 7 billion higher than Dalmia Bharat’s offer. KK Maheshwari, managing director, UltraTech, who led the effort to acquire Jaiprakash Associates’ cement assets earlier, tells Dev Chatterjee in an interview that the company’s offer is a win-win deal for all. Edited excerpts.

Were you aware of the allegations of fraud against the promoters of Binani Cement, levelled by the resolution professional in the National Company Law Tribunal (NCLT)?

We were not aware of this forensic report. This report was not given to the bidders in the data room, and this has certainly come as a big surprise to us. This is the exact reason why we are saying the resolution professional (RP) is not running a transparent process and such crucial information was given to us by newspapers after the committee of creditors has taken a decision. Why did the RP withhold such crucial information from the bidders? Our offer for the company stays on the table as we have valued the business for its future. It is up to the old management to answer any queries about the past financial transactions.

Do you think the RP is following a fair process?

No. And that is why we moved the tribunal. We have followed a fair and equitable process and offered Rs 7 billion more than the rival bid in writing. We decided that all small creditors should be paid fully, as it is the small suppliers and unsecured creditors who suffer the most when a company is in stress. Isn’t it logical for banks and all parties to take the higher offer, which we are ready to pay in 24 hours, than selecting a lower bid? In our proposal, 98 per cent of the trade creditors would have been paid in full. All this was ignored by the RP.

There are reports that UltraTech’s bid was rejected as there is a pending Competition Commission of India’s (CCI’s) case against it. Do you agree?

A bogey was created that we would not get CCI approval because there were some old cases and, according to media reports, some marks were knocked off during the evaluation of our bid for this reason. We are asking time and again to tell us on what basis the scoring was done. Taking all the selection process in public domain, we think we should have been the highest bidder in this case. The fact remains that the said order of the CCI is challenged by us, and currently stayed. After the first CCI order against us and the stay, we got three approvals from the CCI for other acquisitions. I think there was lack of transparency in the entire process and no information was shared with us. After the RP told the NCLT Kolkata that we were indulging in frivolous litigation, we told the tribunal we were a serious player and our offer was of Rs 7 billion more. Till date, we have turned around more cement capacity as compared to the entire capacity of our rival bidder. Hence, we have more experience in turnaround cases. Tis was also overlooked.  

UltraTech decided to buy a 98 per cent stake of Binani Cement when the company was in bankruptcy and a resolution process was on. What’s the idea behind this?

Binani Industries came to us with the proposal after we offered Rs 7 billion more. Binani is facing calls from numerous suppliers, bankers and unsecured creditors. We think Binani Industries has the right to property (for its shareholding) guaranteed under the Constitution of India, and the RP cannot usurp that right from the promoter. Besides, the Transfer of Property Act and the Sarfaesi Act also have provisions that a company can protect its property even at this stage. 

Our proposal will see that Binani Industries’ guarantees worth Rs 10 billion are released by banks. We would have never let this cement company go to the NCLT had Binani approached us earlier.